Small Banks Cast Themselves as Web Portals

By Reosti, John | American Banker, June 29, 2000 | Go to article overview

Small Banks Cast Themselves as Web Portals


Reosti, John, American Banker


Not many banks offer a Web site that lets depositors browse stock quotes and scan sports scores before balancing their checking accounts. Peoples Bank does. The subsidiary of $1 billion-asset Peoples Bancorp in Marietta, Ohio, retooled its Web site earlier this year, with the aim of convincing depositors and other area residents to make Peoples Bank's site their Internet start page, or portal. Becoming a starting point for logging onto the Internet lets Peoples Bank pick and choose the banners and commercial links that computer users see when they first go online. It also entitles the bank to the revenue those advertisements generate. Peoples Bank is one of a small but growing number of banks seeking to turn their Web sites into portals. The logic behind the trend seems compelling: A portal wraps customers more tightly in the bank's embrace, encourages them to bank online, and creates numerous potential streams of new revenue. In April, the first full month Peoples Bank featured the portal, hits on its Web site numbered more than 5,000, which represented a "big increase" from the previous month, according to Alison Thompson, Peoples Bank's Internet banking manager. Q UP of Austin, Texas, the provider of Web-based financial products that produced Peoples Bank's new portal, says they have the potential to make on-line banking a profit center, which is not the case now. Peoples Bank is one of 12 bank portals that Q UP, which employs 140, has produced. Another 38 are in development. According to some studies, while 60% of banking customers use the Internet, only 5% bank online. Banks have not done enough to change that situation, said Dave Dobronski, Q UP's senior vice president for electric commerce. "Most banks invest (in the Internet) from a defensive posture," said Mr. Dobronski. "They feel they have to have (online banking) to retain customers." There is nothing defensive about Mr. Dobronski and Q UP, however. They are touting Internet portals as a way for banks to increase their traditional revenue sources and develop new ones. "We want to utilize technology to make money," said Mr. Dobronski. Q UP, a subsidiary of Austin-based S1 Corp., is not the only company marketing Internet portals to banks, either. Portana, a joint venture between Funds Xpress Financial Network Inc. and FISI-Madison Financial, offers a package similar to Q UP's. Portana's twist is to highlight security. The service, also based in Austin, presents itself as a secure platform that allows bank customers to transact their on-line banking, or shop in any of the linked Web sites without having sensitive personal data put on display for marketers or Web thieves. "We have built a very secure portal, and the bank guarantees that all the information collected inside remains safe," said John Burns, chairman and chief executive officer of Funds Xpress. "Privacy is a huge issue. People know information collected on the Internet is being sold to third parties." FISI-Madison Financial is a subsidiary of the Cendant Corp., which was so enthusiastic about Portana's business plan that it invested $20 million to become a partner, said Mr. Burns. "We are betting a lot on Portana," said Greg Constantine, a senior vice president at FISI-Madison. …

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Small Banks Cast Themselves as Web Portals
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